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The week ahead – week commencing the 11th of March 2019

An underwhelming report on US hiring in February will have investors tuned in to a succession of economic data in the coming week while UK Prime Minister Theresa May will request endorsement for a revised Brexit deal. Here’s what to watch: 

 

Brexit: The UK House of Commons will vote Tuesday on a revised Brexit deal. MPs rejected Mrs. May’s deal by an enormous margin in January, and the government is forecast to roll out updates to the suggested withdrawal agreement before Parliament votes. If MPs strike down the revised deal, the House of Commons may vote Thursday on postponing the UK’s exit from the European Union. The UK faces a March 29 deadline. EU ambassadors are scheduled to meet in Brussels on Wednesday.

Economy watch: Investors will be following economic data amid rising apprehensions that global growth is decelerating. On Friday, the US labour department declared the pace of hiring slowed in February, while China said exports plunged 20 percent last month. The new week kicks off with the latest review on US retail sales. In December, retail sales registered a startling drop compared with the preceding month, rattling Wall Street. Economists expect retail sales to have fallen 0.1 percent in January. Inflation data are also on the way, with US consumer and producer price indices due to arrive on Tuesday and Wednesday. The statements could have ramifications for interest rates. The Federal Reserve has pledged to circumspect and awaits incoming data before raising rates again.

The FOMC’s dovish turn in January should escalate in the near term. The pivot to patience reflects concerns over near-term growth in a context consistently missing the inflation target to the downside.

Also in the US, President Donald Trump will present his budget recommendation for the 2020 fiscal year. The budget report was suspended by the government shutdown in January.

Chancellor’s Spring Statement: UK chancellor Philip Hammond will outline a multi-billion annual rise in the public finances in his Spring Statement on Wednesday. The buoyant public finance figures occur as economists are pruning back their estimates for economic performance as Brexit anxiety takes its toll on corporate spending. Office for National Statistics figures shows borrowing for the year to date is at its lowest levels since the 2008 financial crisis, with income tax revenues boosted by a rise in the pay of the highest earners who pay the most tax. However, the economy remains constricted by strained family finances, Brexit anxiety and a feebler global economy than seemed expected six months ago.

Economic data: The German economy ministry releases the industrial production and trade balance figures for January on Monday. Industrial output fell 0.4 percent a month on for December and 1.9 percent in November in the latest sign of a slowdown in Europe’s biggest economy. The ONS will disclose its January assessment of UK GDP on Tuesday. The economy grew 0.2 percent in the fourth quarter of 2018, but contracted 0.4 percent in December, which facilitated push growth for the year down to 1.4 percent, the lowest since 2009. UK industrial production, construction output and trade figures are likewise out on the same day.

The US Bureau of Labour Statistics announces the producer price indices for February on Tuesday and the industrial production report on Friday. Analysts will follow for Eurozone industrial production figures for January on Wednesday. Last month’s release saw production slip for the second month in a row in December, exposing the effect of stagnant global demand and political anxiety.

China’s industrial production figures, which are circulated on Thursday, will illustrate how the world’s second-largest economy is being affected by its trade war with the US. The January and February data are expected to be marginally weaker year-on-year, down from December’s 5.7 percent.

Other key economic reports include the UK GDP and China’s CPI.

The week ahead – the week commencing 18th of March

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Is the emerging market risk cycle restarting?

Are central banks wary of bouts of March madness?

The euro sinks after the ECB surprise

Why calm currency markets at odds with conventional wisdom

Will Brent crude oil break $70 a barrel?

Can gold maintain its rally?

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